Brunswick Home Remodelers (BHM) uses a job order cost system. The following debits (credits) appeared in Work-in-Process Inventory for April: Description Amount April 1 Balance $ 29,500 For the month Direct materials 167,000 For the month Direct labor 100,000 For the month Factory overhead 96,550 For the month To finished goods (300,000) BHM applies overhead to production at a predetermined rate of 65 percent based on direct materials cost. Job BH-7, which was started during April and is the only job still in process at the end of April, has been charged direct materials of $21,880. Required: How much direct labor cost was charged to Job BH-7 in April?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
| Description | Amount | |
|---|---|---|
| April 1 | Balance | $ 29,500 |
| For the month | Direct materials | 167,000 |
| For the month | Direct labor | 100,000 |
| For the month | Factory |
96,550 |
| For the month | To finished goods | (300,000) |
BHM applies overhead to production at a predetermined rate of 65 percent based on direct materials cost. Job BH-7, which was started during April and is the only job still in process at the end of April, has been charged direct materials of $21,880.
Required:
How much direct labor cost was charged to Job BH-7 in April?
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